A Study on the Economic Effects of U.S. Export Controls on Semiconductors to China

Abstract

Purpose – This study addresses the development of China’s semiconductor industry in the context of the U.S.-China trade conflict, and analyzes the impact on other industries. Design/Methodology/Approach – Based on the multi-regional input-output table industry splitting method, the electrical and electronic equipment manufacturing industry in the Asian Development Bank’s multi-regional input-output table (ADB-MRIO, 2019) is split into semiconductor and non-semiconductor industries, and the impact of U.S. export controls on China’s semiconductor exports on domestic and foreign economies is simulated and analyzed using the hypothesis extraction and hypothesis expansion methods. Findings – The United States has suffered more than China from US export controls on semiconductors to China, and the impact of U.S. export controls on U.S. GDP decreasing by at most 0.0124‰, and China’s GDP decreasing by at most 0.00089‰. Since Japan, Korea, and European countries have become China’s semiconductor import substitutes, they all benefit from U.S. export controls on China. Second, the most affected industries in China are the chemical products, metal products, wholesale, financial, and non-semiconductor industries in the electrical and electronic equipment manufacturing industry. Research Implications – China should adopt coping strategies such as deepening international exchanges, enhancing communication between China and the U.S., and strengthening its scientific and technological strength.